What is a Foreclosure Auction?
When a home foreclosure takes place, the seller who has taken the home back wants to sell it as soon as possible in order to make up the money that they are owed on it. Therefore, you can get a great deal on a home if you attend a foreclosure auction, which is a type of auction that is held specifically for selling foreclosed homes.
Pros and Cons
Before you go to a foreclosure auction yourself, you are going to want to learn about the pros and cons of doing so. Keep in mind that lots of savvy home buyers want to hit the jackpot by going with a foreclosed home, but that you can actually end up paying more if you do not go about it in the right way.
Also, it is not unusual for foreclosure auction homes to receive 20 or more offers, and so you may have to bid on quite a few before you actually get one.
One of the first things you should do if you are trying to buy a foreclosure auction home is get the property history. You want to ask your buyer’s agent to find out the bank’s purchase price on the Trustee’s Deed or Sheriff’s Deed. Generally it is noted on the document itself, which you can get from the tax rolls or a title company.
Make sure that you look at the amount of loans that were once secured to the property, and somewhere between the original mortgage balance and the foreclosure sale price, will be the amount that the bank will accept.
Another important step to buying a foreclosure auction home is to determine comparable sales. In many cases, the list price has little bearing on the value of the home and the market value carries the most weight. If you are up against competing offers, there will be other buyers who will offer more than list price.
You should always ask about the number of offers on any particular home, and if there are no offers on it you will probably be able to get away with offering less than the list price and still getting your offer accepted. On the other hand, if it has quite a few bids on it as most of these homes do, then you may want to make a cash offer, because banks like all cash offers.
As long as you keep these helpful tips in mind you will be able to have great success in finding and purchasing a foreclosure home.